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Tuesday, 1 April 2014

High-end car buyers to benefit from major tax breaks

Importers and buyers of expensive new cars will be able to save considerable sums in registration fees according to the government's new tax relief programme announced on Tuesday.

According to the new rules, cheap vehicle importers will receive a tax relief of between Ks 300,000 (US$ 300) to Ks 5 million (US$ 5,000) while high-class car importers will save up to Ks 20 million (US$ 20,000).

"According to the new rates, the more expensive a car is, the larger tax benefits a handful persons who can buy new cars receive," car dealer Win Htut remarked.The Road Transport Administration Department (RTAD) recently announced new registration fees in the state-run newspapers on Tuesday. The rules are mainly applicable to private cars only.

Registration fees for 1,350 cc engine cars and below has been reduced by 30 percent; cars with 1,351 to 2,000 cc engines by 50 percent; and fees for cars with 2,001 to 5,000 cc engines now get a 80 percent reduction.

For the cars being imported in exchange of old cars, they will receive a reduction of between Ks 300,000 and Ks 5 million. However, most brand new cars will receive a tax reduction of up to Ks 20 million.

“For SUVs, most people buy ones worth US$ 4,500 to US$ 25,000. At the highest price, they usually buy ones worth US$ 45,500 such as the 2008 Toyota Land Cruiser with a diesel engine,” said Htut Hteik from Distinct Trading.

“The higher the price, the higher the relief. Some other kinds will save up to Ks 20 million (US$ 20,000) in tax breaks,” he added.

Distributors of high-class vehicles are usually well-known business tycoons with close government connections.

Many have forged joint partnerships with foreign car makers such as Mercedes, Mazda, Jaguar, Ford and Chevrolet who are all opening new dealerships in the country. Myanmar is seen as an emerging market with a growing consumer demand for new cars.

Many see the new rules as an advantage to expensive car buyers who will save a considerable sum in the registration fees of upmarket cars.